Implats cuts output guidance and capex spend as coronavirus weighs

Impala Platinum (Implats) has cut its output and capital expenditure guidance for 2020 after production losses during a nationwide lockdown to fight the coronavirus, the company said on Thursday.

Implats said in its quarterly update that it expects annual refined production of between 2.6 million and 2.9 million ounces this year, compared with previous guidance of between 3 million and 3.4 million ounces.

Production losses during the lockdown and expected average production rates of between 30% and 40% for May and June at its South African operations led to the revised guidance, it said.

The company had to shut its South African operations from the end of March after President Cyril Ramaphosa declared a five-week lockdown in Africa’s most industrialised country to contain the spread of the COVID-19 pandemic. The government has since said that mines can operate at up to 50% capacity.

The miner, which also has operations in Zimbabawe and North America, cut its guidance for 2020 capital expenditure to between R3.6 billion and R4.4 billion ($199 million to $243 million), from between R4.9 billion and R5.2 billion.

Underground production from Impala Rustenburg, Marula and its Two Rivers joint venture were heavily affected by the initial period of the lockdown.

The lockdown resulted in a 6% reduction in production, equivalent to 26 000 ounces, in its financial third quarter to March 31.

Gross refined production for the nine months to March 31 declined by 5% year on year to 2.18 million ounces.

The company said it would focus on protecting the health of its employee, maintaining customer relationships and reducing excess processing stockpiles to secure cashflow and protect its financial position.

“The group’s focus for the remaining months of FY 2020 will be multipronged and will include securing operational stability in a period where unplanned interruptions are likely to be a regular feature,” Chief Executive Nico Muller said in a statement.